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Tuesday March 3, 2015

Washington News

Highway Bill Rolls Through Congress

Just hours before the August 1 deadline, the Senate voted 81-13 to pass the Highway and Transportation Funding Act of 2014 (H.R. 5021). Without passage of a bill, many states would immediately have had to halt highway, bridge, mass transit and other projects. Because summer is the peak season for infrastructure projects, this would have seriously harmed the entire economy.

The House bill was introduced by Ways and Means Chairman Dave Camp (R-MI). It funded highway projects for 10 months until May of 2015. The House bill includes an offset called “pension smoothing.” Corporations who are making payments to gradually bring their pension plans back to appropriate funding levels will be able to slow down the pace of those payments. Because it will take a longer period of time to fund the corporate pension plans, there will be fewer deductions and higher taxes. Camp’s bill passed the House on July 15 with a strong bipartisan vote of 367-55.

The Senate bill was sponsored by Sen. Barbara Boxer (D-CA) and Sen. Thomas Carper (D-DE). It proposed funding highway projects only until December 19th. Sens. Boxer and Carper proposed that deadline with the expectation that Congress would be forced to create a longer term funding plan for 2015. The Senate bill was funded through various tax compliance measures.

House members observed that there was a $2 billion error in drafting the Senate bill. Chairman Camp opposed the Senate plan to increase IRS tax compliance provisions. He stated, “I don’t believe giving the IRS more authority to go after taxpayers in a highway bill is appropriate.” He explained that the 2015 deadline is sufficient time to “get a longer highway bill through May because of the planning that goes into a lot of highway projects over the winter.”

The House rejected the Senate bill on July 31. The Senate then voted to agree to the House version of the bill. The bill will now be sent to the President for his signature.

Editor’s Note: Congress is grappling with a basic problem. Because cars are now becoming more fuel-efficient, the revenue from gas taxes is below projections. As Americans continue to purchase more fuel-efficient cars, future gas tax revenue will continue to be below the highway trust fund need. Congress has been reluctant to raise gas tax rates because that is politically unpopular, but it will need to find a funding source for highways and other infrastructure projects.

ABLE Act Aids Disabled

On July 31, the House Ways and Means Committee approved the Achieving a Better Life Experience (ABLE) Act of 2013 (H.R. 647).

The bill creates a new Sec. 529 account for disabled persons. The traditional Sec. 529 account is often funded by parents or grandparents and used for education. Sec. 529 accounts are funded with cash but grow tax-free and the distributions for approved purposes are tax-free.

The ABLE Act would permit individuals who are blind or disabled before the age of 26 to create similar accounts. An ABLE account must be funded with cash and both the growth and appropriate use of the funds would be tax-free.

The bill was co-sponsored by Rep. Robert Casey, Jr. (D-PA). He was pleased with the passage and noted, “We are hopeful that today’s action by Ways and Means will provide the necessary momentum for the ABLE Act to become law in September. This action is eight years in the making and reflects the tireless work of individuals with disabilities, their families and advocates.”

At a House Ways and Means Committee hearing, ABLE Act advocate Sarah Wolf testified. She stated, “Just because I have Down Syndrome, that should not hold me back from achieving my full potential in life. I can work a full-time job, be a productive member of society, and pay taxes – but because of these outdated laws placed on individuals with disabilities, people like me are held back in life.”

Miss Wolf was referring to the provisions of the Medicare and SSI programs that have a “resources limit” of $2,000. This limit makes it difficult for individuals to secure employment and still retain their federal benefits.

Ranking Member Sander Levin also supported the act. He noted, “Whether it is cost associated with transportation or housing or health prevention and wellness, this legislation aims to ease the financial burden by encouraging and assisting families to save money for disability-related expenses.”

Editor’s Note: The estimated cost of the ABLE Act over the next decade is $2 billion. Chairman Camp and Ranking Member Levin have agreed that they will find offsets acceptable to the full House and Senate for this bill.